What Is the Profitability Index of the Boeing 787 Dreamliner

question 26

Multiple Choice

What is the Profitability Index of the Boeing 787 Dreamliner project? The Boeing 787-8 can carry 230 passengers up to 8,200 nautical miles at a cruising speed of mach 0.85. The Dreamliner is more comfortable for passengers because of higher cabin humidity. Boeing completed construction its assembly plant in Everett Washington in December 2007 at a total cost of $7B. Boeing has secured sales of 865 aircraft over the period 2008-2012 for total proceeds of $138.4B ($160M per aircraft) . The cost of building each plane is $140M. Assume that sales (and costs) occur in December of each year. Assume that sales are spread evenly across the five years from 2008-2012. The project cash flows are shown in the table, below. What is the Profitability Index of the project if Boeing's cost of capital is 10%? Calculate the index as of December 1, 2007. Ignore taxes. $$\begin{array} { | c | c | c | c | c | c | } \hline \text { Year } & \begin{array} { c } \text { Capital } \\\text { Investment }\end{array} & \begin{array} { c } \text { Annual } \\\text { Sales }\end{array} & \begin{array} { c } \text { Annual } \\\text { Revenues }\end{array} & \begin{array} { c } \text { Annual } \\\text { Costs }\end{array} & \text { Cash Flows } \\\hline 2007 & - \$ 7,000 \mathrm { M } & & & & - \$ 7,000 \\\hline 2008 & & 173 & \$ 27,680 & \$ 24,220 & \$ 3,460 \\\hline 2009 & & 173 & \$ 27,680 & \$ 24,220 & \$ 3,460 \\\hline 2010 & & 173 & \$ 27,680 & \$ 24,220 & \$ 3,460 \\\hline 2011 & & 173 & \$ 27,680 & \$ 24,220 & \$ 3,460 \\\hline 2012 & & 173 & \$ 27,680 & \$ 24,220 & \$ 3,460 \\\hline\end{array}$$

• A)-1.52
• B)-0.44
• C)1.06
• D)1.87
• E)2.43

Identify the strategic importance of key accounts in sales force resource allocation.

Apply basic sales-related financial calculations to assess sales performance.

Understand the role and importance of emotional intelligence in sales performance.

Recognize the significance of sales territories and scheduling for effective sales management.

---

Definitions:

Thyroid Hormone

Hormones produced by the thyroid gland, including triiodothyronine (T3) and thyroxine (T4), that regulate metabolism, energy generation, and overall growth.

Target Cells

Cells that are affected by specific hormones, drugs, or other substances, having receptors that bind these molecules.

Thyroxine

A substance generated by the thyroid gland that controls metabolism, the production of energy, and the processes of growth and development.

Posterior Pituitary

A part of the pituitary gland that releases hormones like antidiuretic hormone (ADH) and oxytocin into the bloodstream.